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Drop in well paid using IFA's

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Comments

  • ILW
    ILW Posts: 18,333 Forumite
    Linton wrote: »
    Which market are you going to use for your market average? If a customer wants a steady and safe monthly income to supplement their pension should the IFA ignore this and go for EM shares because that may provide a higher 5 year return? In your scheme it would do wonders for their income, far better than any 0.5% commission!

    Why would anyone take on a job that may pay nothing? I dont know what job you do (if any), perhaps you can let us know and I am sure we can come up with an appropriate metric on which to base your pay to ensure you are actually doing something useful.

    I feel another "Ignore" coming on.

    Many SE jobs pay nothing if the wrong decisions are made. IFAs seem to want paying even if their advice is wrong or just poor. They seem to think it OK for the client to take any risks without taking any responsibility themselves.:A
  • Linton
    Linton Posts: 18,349 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    ILW wrote: »
    Many SE jobs pay nothing if the wrong decisions are made. IFAs seem to want paying even if their advice is wrong or just poor. They seem to think it OK for the client to take any risks without taking any responsibility themselves.:A


    Not on a 50% chance basis. The "market average" is by definition an average, 50% will do better 50% worse. Or are you one of those who believes that if everyone put real effort into something they would all beat the average?
  • Aegis
    Aegis Posts: 5,695 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    ILW wrote: »
    Many SE jobs pay nothing if the wrong decisions are made. IFAs seem to want paying even if their advice is wrong or just poor. They seem to think it OK for the client to take any risks without taking any responsibility themselves.:A
    Your comment about taking no responsibility isn't in the least bit accurate. Every bit of advice an IFA gives can come back to haunt him in the form of an upheld complaint at any point in the future. There is currently no long stop on financial advice, so something advised tomorrow could be the subject of a complaint in 40 years time if it takes that long for a mistake to come to light.

    How many other jobs do you know where you remain responsible for the outcome of your work for that long?

    Ultimately IFAs are there to try to assist people to make financial decisions commensurate with their goals and fears. We can't be expected to predict the future with anywhere near 100% accuracy due to the nature of the investment markets. It's possible to look into investments that generally have a lower volatility or a higher performance than a specific benchmark, but there can be no guarantee that these investments will continue to perform in that manner. Making investment decisions is all about balancing probabilities, not certainties.

    All in all, if I carry out work for a client I make it clear that I'm not going to be able to make sure that their investments always outperform, but I am going to be there if the recommendations need to be revisited in light of changing circumstances. However, I expect to be paid for the work I do at a rate agreed at outset. I don't think there's anything wrong with that outlook.
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
  • ILW wrote: »
    IFAs seem to want paying even if their advice is wrong or just poor. They seem to think it OK for the client to take any risks without taking any responsibility themselves.:A

    I thought the point was that the IFA is selling you a portfolio suitable to your requirements. That's the service they're getting paid for. But no-one can predict what the markets will be doing over the timescale the plan is based on.

    And presumably another part of the service is ensuring that the client is aware that they are taking a risk.

    (That would be in the perfect world, of course. I have no idea how often IFA's make the correct risk assessment, or construct a good portfolio, or have any bias if they are commission-based.)
  • ILW
    ILW Posts: 18,333 Forumite
    Linton wrote: »
    Not on a 50% chance basis. The "market average" is by definition an average, 50% will do better 50% worse. Or are you one of those who believes that if everyone put real effort into something they would all beat the average?

    You do not need financial advice to get an average return, any tracker fund will do that for you. So I would expect in return for a fee to get a better than average return.
  • Linton
    Linton Posts: 18,349 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    ILW wrote: »
    You do not need financial advice to get an average return, any tracker fund will do that for you. So I would expect in return for a fee to get a better than average return.


    So the ILW IFA service would listen to the poor widow-woman's need for a steady income to supplement her meagre pension and then offer a FTSE-100 tracker that wouldnt provide a sensible income and on the evidence of the past 10 years may or may not provide any return after 5 years.
    Linton wrote:
    I feel another "Ignore" coming on.

    Aaaah that feels better
  • robmatic
    robmatic Posts: 1,217 Forumite
    Aegis wrote: »

    Churning is specifically against FSA regulations and any compliance department worth having would block such a transaction. Most fund switches these days are done on a platform, which means usually no switching fees and no difference in trail commission between funds.

    If you're referring to rebalancing rather than churning, then that's a service that should be offered by IFAs and would need to be paid for somehow, either through trail commission or an agreed fee per review.

    The accusation of churning is quite a serious one, do you have specific details as to who does it and how widespread it is, or are you just assuming the worst about IFAs again?

    I was contracting at a major life office last year and attended their business strategy briefings. They explicitly stated that they were expecting increased levels of new business activity in the run-up to RDR as advisers were showing signs of moving policies in order to get trail commission in place while they still could.
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    ILW wrote: »
    You do not need financial advice to get an average return, any tracker fund will do that for you. So I would expect in return for a fee to get a better than average return.


    You or I may not need advice to get an 'average return'. But widows, orphans and the generally clueless do.

    I have seen here and elsewhere those who decide not to get advice make horrible mistakes. From tax/IHT implications, to general investments incl but not limited to all the eggs in one basket, and money under the mattress scenario.


    I have sen pl;enty here an elsewhere not to know how to open an ISA ans choose a tracker off the shelf.

    I hand hold for friends and relatives how to do so and don't charge a bean (even for book keeping and mtg and savings enquires) but not many have a 'free service'.
  • ILW wrote: »
    You do not need financial advice to get an average return, any tracker fund will do that for you. So I would expect in return for a fee to get a better than average return.

    A tracker will give an average return over the long term, with gigantic fluctuations over the short term. That's fine if you are investing for the very long term, and are not paniced by the nature of the markets. But if you are investing on a specific timescale, you probably need to sacrifice some growth for some stability. So you need a more balanced portfolio. And as you approach your deadline, you presumably need to continue to derisk so you don't lose the lot in a drop just before you need the money.

    Some people can work out how to do it for themselves, some people need help.

    And presumably some people think they can work it out for themselves, but then discover when they need the money that they didn't know quite as much as they thought.

    But financial advisors are there for more than just suggesting investment portfolios. (I'm guessing) they know about what sorts of products are available, and they know about taxes and things. They can point out alternative ways to do things. I'm sure they know about things in the pipeline before the rest of us do.

    I don't think I need an IFA to make my investment decisions for me, but as others have said, I'm sure I'll take advice for more complicated transactions in the future. (And I'm very grateful to the IFA's on here who post on all sorts of interesting topics that I know nothing about.)
  • Glen_Clark
    Glen_Clark Posts: 4,397 Forumite
    Linton wrote: »
    Buying and selling certificates is more expensive and takes longer than buying and selling shares held via nominees.
    Depends how long you keep them.
    Buying certificates costs more, but you only pay once.
    If they are held by nominees you are likely to be charged a quarterly charge, and an exit charge. If not straightaway, you liikely find these charges being introduced and increased once they are holding your shares.
    And how can you be sure the fund manager holding your shares is not a Bernard Madoff?
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
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